Copenhagen Infrastructure Partners, a leading Danish investment firm, is setting a new benchmark in the renewable energy sector by launching its ambitious Growth Markets Fund II. The fund aims to raise a staggering $3 billion to fuel the construction of renewable energy projects in emerging and middle-income economies. The focus will primarily be on greenfield projects that encompass a broad spectrum of renewable energy technologies, including wind and solar power, battery storage, and power-to-X technologies. These technologies are known for their ability to convert electricity into carbon-neutral synthetic fuels, a crucial step towards a sustainable future.
Addressing the Investment Gap
The launch of this fund coincides with the COP28 climate talks in Dubai, which are underscoring the dire need for increased investment in developing economies. These economies are striving to transition to a low-carbon future, a shift that requires significant financial backing. Despite the urgency, funds allocated for renewable projects in these regions have seen a sharp decline. In 2023, the funds raised barely touched $550 million, a stark contrast to over $1 billion in 2022 and nearly $8 billion in 2020.
Aiming for a Power Surge
Growth Markets Fund II aims to address the mounting electricity demand in these countries by providing affordable power. The fund has set its sights on procuring investment returns in the teens. Copenhagen Infrastructure Partners, a heavyweight in asset management with 26 billion euros under its purview, has a track record of involvement in major renewable projects. These include an offshore wind farm in Bangladesh and wind energy schemes in the Philippines. The firm plans to pre-seed the new fund with approximately 20 projects, primarily targeting the Asia Pacific and Latin America regions.
Climate Talks Highlight Urgency
Amid the COP28 climate talks, the UAE climate chief has raised concerns about the lack of scientific basis behind demands for a fossil fuel phase-out. Concurrently, a report released at COP28 reveals that at least 918 protected areas are under threat from ongoing or planned fossil fuel extraction projects. The potential CO2 emissions from these projects pose a grave environmental risk, further underscoring the urgency for increased investment in renewable energy projects. As nations grapple with the challenges of energy transition, initiatives like Growth Markets Fund II are poised to play a crucial role in shaping a sustainable future.